tv Nightly Business Report PBS July 10, 2014 7:00pm-7:31pm EDT
this is "nightly business report" with tyler mathisen and susie gharib. >> pressure points, stocks yoyo on concerns in europe and weak economic data from around the world. is global growth faltering? >> online opportunity. why the increase in cybercrime could be a growth area for insuran insurance. >> how technology advances in medicine are bringing a whole new meaning to the term. we start a two-part series on telemedicine. that and more for "nightly business report" for thursday, july 10th. good evening, everyone. the stock market o's closing numbers don't tell everything. the dow plunging 180 at the open and rebounding at the close.
there was nothing normal about the trading session. investors dumped stocks from europe about the financial health of a big but relatively little known bank in portugal. it missed some debt payments that stirred up worries of a repeat of the european banking crisis from a few years ago. but then, comments from many market pros here in the u.s. all day long reassured investors the fundamentals had not really changed and stocks made a u-turn. by the end of the day the dow lost 70, nasdaq off 22 and s&p slipped eight points. today's losses followed a big sell off over in europe, not only because of worries about the health of portugal's financial system but a slowdown in manufacturing across the contine continent. that renewed concerns how far europe and its banks have come since the financial crisis. karen has more now from london. >> reporter: it was a day of
fear for european markets as investors were scared by the banking system and economic news. it slumped 1. 2% in may about a soft patch emerging across the region. we saw the steepest falls and other markets. the old fears played up around debt in european banks. bankers, the stock falling as you can see on markets. the holding companies that created the lender are struggling to repay debt and today, delayed coupons on short-term loans. the web around these hoarding companies in question have reminded investors just how opaque europe's banks are. the bank sent a stock double digits suspended today but lost more than 50% so far this year. the panic extended to credit markets, as well. a bond was also scraped today because of sentiment and a sell
off for european bonds weakened for greece's issue despite high hopes. it's the second time since the international bailout of today's washout on equity and credit markets has raised questions how far along the road europe traveled to the banking system. >> but the concerns stretched beyond portugal as steve liesman tells us, weak economic data in europe and asia has some wondering if we're headed for a world of worry. >> reporter: it seems like big teams are losing except one, so far the united states. deeply negative data from leading industrialized nations sent market sboosinto a tail sp today. economists forecasted a slight gain. exports disappointed and france and germany come in with worry
system declines. meanwhile, the fallout from the bank in portugal renewed concerns about trouble in europe's banks. jp morgan says some of the data appears worse than it is because of a few extra holidays during the month but says it's still not pretty. >> europe is the key issue right now. we've been thinking europe could grow 1.5 to 2% this year, first half of the year is averaging no better than one. that disappointment to me is what i really want to keep my eye on as we look forward. >> reporter: and then the u.s., jobless claims fell more than expected and now hoover a shade above their best level since the recession in 2008. in fact, they are actually running at quite normal levels. this follows the strong june jobs report announced last week. the question is whether the u.s. can prosper if key trading partners are weakening. half of the economists construction in the first quarter was the result of a plunge in trade and tricking chinese exports in japan where the u.s. sources a lot of goods raised questions about u.s.
spending and investment. >> there is no doubt in my mind that it's going to be hard to get a u.s. economy to grow as fast as we would like it to grow, which is well above 3% unless we have a global economy that's doing okay. >> the u.s. may be the best economic team on the field but it can't play the game alone. for "nightly business report", >> let's turn to jim paulsen for more on the financial markets. he's chief investment strategist at wells capital management. welcome back. let's talk about europe, which was just sort of sketched out there in steve's report. is europe doing all that well, or not very well? and if so, how worried should we be? >> it's certainly not doing very well as the report suggested. they are probably growing somewhere between 1 and 2% whereas the u.s. is 3% or better, so the thing about europe is they are following behind the recovery that the united states has because they
were late in policy stimulus where the u.s. was early. and so, you know, if you think back a couple years in the united states, we were still having periodic returns to debt crisis fears and suffering from very weak growth and couldn't get going and i think that's what europe is experiencing now. i think they made progress, tyler, and i think they will continue to make progress the rest of the way in. >> so are american investors right to be worried about the global economy, and also, i want to add on to this, what do you think about what carl icahn said today, time to be cautious about stocks? so what do you think about that? >> well, i thought all year, susie, that the s&p 500 would maybe work its way up towards 2,000 and struggle toward the second half of the year and i think that. i think better news coming off main street in the united states, better than expected economic reports has pushed the stock market higher, but i think in the united states what is
going to happen is we're going to find out with continued good news in the united states that we'll get more worried about inflation pressures and interest rates pressures and is the fed pulling away and will that start to create turbulence for stocks. i think it is time to get more cautious. it's just over the next several years, the stock markets across the globe might go considerably higher. so i think one of the worst things you can do is worry too much about a 10% correction and miss the next 50% rise over the next several years. so i would get cautious but rather than pulling away from the stock market a lot, i would prefer just to keep an over weight in equities but diversify it, move some of it out of the united states and defensive sectors. >> let's talk about that. you've been a very strong bull historically over the last year or so but now u.s. evaluations are something like 18 times earnings. >> right. >> if you argue to diversify, where and that would suggest that you like the non-u.s.
markets and their values better than you like the u.s. one right now. >> i do, tyler. you know, i would go offshore with a bigger amount of my equity exposure now away from the united states. the united states has beat everybody in the last couple years. it's solidly beat the emerging markets but also solidly beat most of the international developed markets, as well, meaning their relative values improved and i would go and take advantage of that. you can't often find value with some issues, so the reason there is good value in europe is because they are not growing as fast. same thing with japan for example. but what that gives you is you can diversify away from the economic cycle and go to something that has a different place in the recovery than the united states. they are not worried about policy officials tightening in europe and japan like here. i also like canada and australia because i think if we have more inflation fears here in the united states, we will drive
commodity prices higher and the commodity based resource markets might lead the world market for awhile, and then lastly, i would point out the emerging markets, tyler, as you said we're selling at 18 times and they are selling at 13.5 times and if they slow to six to seven percent growth that's still twice than here in the united states. >> thank you for being with us. >> thank you. okay. an update on economic news here in the u.s. as to mortgage rates. they inched up a little bit last week. freddie mac says average rates rose to 4.15% this week up from 4.12% a week ago. on the 15-year mortgage it rose to 3.24. they are a little lower than the same time last year. >> mortgage rates are attractive right now and home price gains are easing and employment is improving, so why aren't more
people buying houses? because they can't afford to. our real estate reporter diana olick has details. >> reporter: home prices aren't rising as fast as last year but they are still higher. >> i think a lot of buyers and sellers are trying to figure out what reality looks like. >> reporter: 97 of 100 housing networks showed year over year price gains, the most since the housing recovery began and asking prices by sellers in june rose at the highest month over month rate in 16 months. wage increases are nowhere close to that. >> with prices rising 8%, it's affordability is getting worse. now the question is, does getting worse mean the same thing as bad? >> reporter: he claims affordability is better than historical averages, but today's potential buyers are saddled with higher student debt and facing a tougher mortgage market.
>> it challenges down payments, for sure, having the cash to be able to put down 20%. >> reporter: the federal reserve has taken note of the sluggish housing market suggesting that persistent structure changes in housing demand are pushing more people to rent. real estate agents are saying sellers are more out of touch than ever what buyers can stoma stomach. in may 40% say they plan to list homes above market value, even though home sales were down 9% from a year ago. >> sometimes sellers are the last to know that prices may be stabilizing a little bit or that the increases you were expecting aren't necessarily going through. >> reporter: there may still be too few listings for sale but given the higher prices, it is becoming less and less of a seller's market. for "nightly business report", i'm diana olick in washington. cash strapped americans would pay mortgage first and then auto loans and then their credit card bills. not anymore.
the american banker's association says the share of credit card holders paying off balance in full was the highest on record according to the latest data and late payments hit a 23-year low. >> up next, how data breaches like the one at target last year are creating a growing demand and opportunity with the insurance industry. it appears washington lawmakers are moving closer to a compromise on president obama's request for nearly $4 billion in emergency spending on the boarder crisis. any deal would likely include policy changes to expedite the return of tens of thousands of children who have been streaming
across the u.s. boarder with mexico and send them back to the home country. it's being called the only must-pass legislation, the transportation highway bill and now senate finance committee leaders have agreed on a nearly $11 billion plan to extend construction funding. closely matching a plan from house majority leader john boehner that includes changes in pension taxes and customs fees. john harwood joins us from washington with more on this bill making its way through congress right now. john, is this just a stopgap measure? is your take on it? >> absolutely, it's just a stock gap. this is not just must-pass legislation, susie. it's must pass soon legislation because the highway trust fund financed by the gas tax becomes insole vanvent next month. they need to extend projects underway at least temporary. both of the bills would extend the trust fund into the middle of 2015, but only until the middle.
this program is typically authorized for five-year periods of time but come up because there is so much difficulty coming up with ways to finance it with a $10 billion package on the senate side, similar to the house side to extend to mid 2015. >> why is the short-term stopgap solution so indemic in washington? >> they are polarized and divided. the larger or longer solution to a problem becomes, the more expensive it is and the more money that has to be cut for the budget -- from the budget if you're looking for a republican perspective or increased in taxes from a democratic perspective. so what tends to be the compromise default is a path of least resistance. the smallest possible for the shortest period of time, not a great way to do business, but that's about the only way that can work in washington. >> speaking of business, where does this leave american businees? they can benefit.
>> it leaves business uncertain, susie, across a range of fronts on the highway bill, construction projects, the xm bank, something at risk, vulnerable in the congress, even though democrats support it, some republicans don't. on tax extenders which typically get things like the rnd tax credit get extended. immigration, also. >> thanks a lot, john. john harwood reporting from washington. the white house is swinging against efforts to make a business depriestuation tax break permanent, known as bonus depriestuation. it lets companies deduct half the cost of certain equipment purchases up front instead of deappreciating the gear over several years. making the break permanent would cost uncle sam nearly $300 billion in revenue over the next ten years. verizon sees a dramatic increase in subscribers in the second quarter.
that's where we begin market focus. 1.5 million customers joined verizon. the tablet and smart phone business also grew and the company's ceo sees that trend continuing throughout the year. >> we think this will be a great quarter for us. we'll have our full results on the 22nd of july, but we added over 1.4 million subscribers post pay, net ads. we had very strong smart phone growth. we had very good turn and delivered margins consistent with what we've done over the last several quarters. in audition, we'll expand our wire line margins, which is a commitment we've made to the investors. so second quarter is very strong for us and i think it's an indication that the industry is very strong. >> verizon shares rose 1.5% to almost $50 a share. lumber liquidators said many
are holding off on renovations. the stock went down more than 21% to $55.25. other home improvement retailers fell. home depot was the worst performing stock in the dow, falling more than 1.5%, lowes down by more than 1%. after the bell today, gap reported the june store sales fell 2%. it's gap and banana republic stores suffered the most with sales down 7% but the old navy chain performed well. shares fell initially after hours down about 1% during the regular session the stock was also down a percent to $40.97. it was a different story for costco, though, sales at the retailer were up 6% topping estimates and that's thanks to higher fuel prices. shares rose up to $118 and
change. ibm is betting big on chips, big blue announced plans to invest 3 billion in computer chip research and development to revive slumping sales. shares down a little bit, $187.70 was the close. conaco phillips went to 73 cents a share. it will be made to shareholders in september. investors didn't seem too pumped. shares off $85.67. boeing doesn't expect jets to slow down. they expect to sell now 37,000 planes worth more than $5 trillion over the next 20 years, up from the previous forecast of $4.8 trillion in sales. the main driver of that growth is airline demand for smaller passenger jets. despite the news, flat at $126.79. amazon.com gets scolded and
sued for billing parents millions of dollars of unauthorized purchases by kids. the purchases or goods and services you can buy once a moebl app has been downloaded. they have been pressuring amazon to make changes to the app store like getting a parent's permission before buying something. amazon called the lawsuit quote deeply disappointing and says it's already refunded unauthorized purchases made by kids. >> apple agreed to set tighter controls and paid at least $32 million. another cyber attack on the u.s. is linked to chinese hackers. "the new york times" reports that hackers in china broke into a government personnel database, apparently, targeti tens of thousands of federal workers applying for top level security clearances. with target stores still reeling from that massive data breach last year, it's clear that cybercrime is a growing problem and that means growing demand for the insurance that protects against it. marry thompson takes a look at
the small but expanding markets for cyber insurance. >> reporter: in the city that never sleeps, one staffing company bought something it hopes will help its owners and clients sleep better. >> our clients are talking to us about it. they were asking us about it and in order to prevent being behind the eight ball, we felt like we wanted to be proactive and go ahead and get the insurance because we knew it was something that was important to our clients and then of course it was important to us, as well. >> reporter: the insurance clarities head of operations elizabeth wade is talking about, cyber insurance. clarity is one of a growing number of firms adding this layer of protection should their computers or those that their venders or suppliers get hacked or hijacked by a computer virus. >> up until now, the growth is driven by data rich industries, so retail, higher ed, financial, even tech and telecom but with
the expansion of coverage, with the growing awareness, we're seeing other industries come into play that never looked before, construction, power and utility, manufacturing. >> reporter: bob works for marsh usa, he says ma s marsh's firs sales are double those of 2013. here is why a company would want cyber insurance. a study puts the cost of cybercrime to the global economy at $445 billion a year. cyber insurance would cover some cost including business disruption, legal and crisis management cost, cost to investigate the breach and the cost of notifying customers which is mandatory in most states. new regulations are a factor behind the growing demand for cyber insurance along with high profile breaches like the one at target. this helped to bring in new clients and prompted existing clients to buy added coverage. cyber insurances is a fraction
of the policies that have been sold here in the u.s., by the likes after aig, travelers and marsh but it is a product he says holds great promise. >> there is nothing that indicates that the growth is going to be anything but increasing. >> reporter: a market growing to protect against a growing problem. for "nightly business report", i'm mar mary thompson. >> coming up next, the doctor will see you now but you might need a computer or tablet for the appointment. we'll tell you why. crumbing bakery may not be falling apart after all.
shares skyrocketed 1300% after news a group of investors including marcus star of the cnbc program the profit are preparing a bid to save the high-end cupcake shop. we told you on tuesday that the company shut down all 48 of the stores around the country following losses and declining sales. consumer products giants that makes lipton tea, pasta sauce and dove soap is selling slim fast to a private firm. the sale is part of efforts to concentrate on the high margin personal care division. what if you could see your doctor 24/7? thanks to new technology, you can, online. so the telemedicine is the next big thing. employers are embracing it in a major way to cut cost.
>> reporter: lindsey had a lot to do before the holidays and was coming down with an infection. >> i needed to see a doctor and get what i needed to take care of so i would move on with my life. >> reporter: she logged on and talked to one online at work. >> she was able to treat me and on my way home i picked up a prescription she sent to my pharmacy. >> reporter: marvel technology signed on this fall, but even in the heart of silicon valley, it's been a tough sale. >> we've had a slow uptake in convincing people to use the service. i think because it's such a new idea. >> reporter: the chip firm is helping the $49 online visits catch on. >> it can potentially be a huge cost savings. if you go see a regular doctor, your cost is anymore from 150 to $200 for an office visit. it's a big, big difference. >> reporter: well point launched the service last fall as a part of employer plans to save money and time. >> it can often replace an
emergency room urgent care or retail clinic visit which clearly is higher. >> reporter: it's making a bigger bet on technology with live help that includes tools to manage vital signs like blood pressure and a dermatology cam. for a fraction of the cost of a work site clinic. >> there is a medical record that's generated. if a prescription is written. it's a part of the visit and documented. we think it's something different that your health plan is ingrated with this. it's paperless. >> reporter: insurers like well point embraced it because of the affordable care act. now that they have to sell to individual members and marketplaces, they want to be able to offer them more affordable and consumer friendly options. >> have you checked your temperature? >> reporter: they are rolling out live health for the individual market to thing easy on demand access for the same flat fee. so how do you make it work?
>> charging $49 for them. >> let's just say it's an invest. the future in our business is having relationships with consumers and being a trusted source for them. >> reporter: once you get them over the tech hurdle, that is. >> you got to do it once and get the concept. >> reporter: bertha coombs, "nightly business report." >> actually sounds pretty cool. that will do it. sign me up. that will do it for "nightly business report." thanks for watching, i'm tj yle mathisen. >> i'm susie gharib. have a great everything and tyler and i will see you back here tomorrow. n and tyler and i will see you back here tomorrow. in and tyler and i will see you back here tomorrow. g and tyler and i will see you back here tomorrow.
>> this is "bbc world news america." >> funding of this presentation is made possible by the freeman foundation, newman's own foundation, giving all profits to charity and pursuing the common good for over 30 years, kovler foundation, and union bank. >> at union bank, our relationship managers work hard to understand the industry you work in.